My pal Andy Abramson just posted this and it’s a pretty thoughtful look at what’s coming in IP communications. As such, it led me to rethink some of my recent comments, and seems a good opportunity to revisit these two subjects.
What’s Next In IP Communications? Here’s An Idea To Look At
Last week two stories seem to generate a lot of interest all across the blogs and in the news. The first was the rumor of a “Skype Killer” being planned by the leading telcos around the world. The second was the blockbuster move by the new WiMax consortium of players including Intel, ClearWire, Sprint plus the cable companies, along with online leader Google, to take over what Sprint and Clearwire were both not really doing yet, that to create a national WiMax footprint here in the USA which will deliver, in theory, both Mobile and Fixed broadband solutions.
These two topics are really pretty central to IP communications as we look ahead. Skype isn’t a panacea, but it’s the largets VoIP deployment in the world, and remains wildly popular. And it’s still growing. WiMax is arguably a successor to WiFi, or a fit somewhere in between WiFi and carrier wireless broadband. It could be the next carrier wireless broadband for data if it really succeeds.
Here’s a point Andy makes that the two technologies may be interwoven -
You see, the genie is out of the bottle and there’s no putting the Skype Genie back in, so another more robust and accepted flavor of IP communications that does the same thing and more, but without the already known concerns that Skype raises, could overtake them in time,
especially if its primary purpose was to supplant the existing analog base of installed users as the telcos move them to IP on their own or see them migrate to cable or WiMax.
I’m not sure I fully agree with the details, but I’m absolutely on the same page as Andy with regard to the problems.
The telcos don’t like Skype. Fair enough. They don’t like competition of any kind. They’ve struggled with it since divestiture of the old Bell System in 1984 and have a a long history of killing competition. But they’ve done too little for too long, and it’s far too late. What was once the leading technology industry (think 1956 and Bell Labs invention of the transistor), has fallen into a malaise of maintaining status quo and a sense of the right to be the incumbent forever.
Skype is in play. It may not be openly, actively courting, but Skype is clearly in play. And eBay has demonstrated their inability to leverage their huge investment in Skype toward any substantial success. Yet Skype continues to grow and improve. There’s been some speculation that some consortium of telcos might actually make a move to buy Skype. I think it’s highly unlikely. One of the biggest negatives Skype has shown is its disinterest in open standards for VoIP. for the telcos to embrace Skype, they’d have one of two paths to follow - (a) radically alter Skype to use open standard VoIP in fitting with their infrastructure, or (b) radically re-architect their own networks to use or add Skype’s protocols.
Either presents major problems, and would take on a lifetime of reinventing telephony all over again. They telcos believe they already know telephony, because they know it as it was. Frankly, they don’t have the innovative wherewithall to pull off either of those options successfully. What they might be able to do is mediocritize Skype by building a series of gateways to the PSTN. This could work from a technical standpoint. It also makes sense from a regulatory perspective to manage Skype in a fully separate environment.
Given the innovation shown by the telcos for the last fifty years (please note the tongue-in-cheek…there has been no substantive innovation by the telcos for fifty years), this last option seems a slippery slope, fraught with business, technology, and customer satisfaction problems.
So pick your analogy. Andy said the genie is out of the bottle. Others have said the horse is out of the barn, the water’s over the dam. For the telcos, their response to the Skype threat is simply too little, too late. Skype came on their horizon at a time every telco executive had been forced to read The Innovator’s Dilemma by Clayton Christensen. Every one of them knew full well that disruptive technologies come with a set of known characteristics. Disruptive technologies generally:
- Arrive substantially “downmarket”
- Less complex and expensive (off-the-shelf)
- May sometimes be more costly
- Lower performance than mainstream technology
- Offer lower margins than mainstream technology
- Are introduced into insignificant markets
- May have to make their own markets
- Are perceived as unnecessary by mainstream customers
- Do not fit mainstream value model
- Are difficult to deal with by established players
- Carry significant first-mover advantage
They knew this and ignored Skype until it was too late. Years too late. Skype ate the telcos lunch, and in many ways now has the mindshare that the traditional telcos can never win back. They rested on their laurels as a sustaining technology.
Just as radically as the 3.5″ disk drive disrupted the old traditional disk makers out of business, Skype has forever changed the face of voice communications.
- Of leading 14” drive makers, none survive the 8” drive
- Of leading 8” drive makers, 1 survives the 5.25” drive
- Of leading 5.25” drive makers, only 35% introduce a 3.5” product!
It’s nice that the telcos finally woke up to smell the coffee, but the pot’s almost empty and there’s a hole in your cup. Too little too late. Like many of us have been saying for years to the telcos - the bell tolls for thee.
Andy goes on to bring in the WiMax angle as a related topic -
WiMax. Last week’s announcement of the mega players all joining hands was a very good deal for Clearwire and Sprint.
Clearwire’s investors cashed out. Sprint got someone else to carry the
ball in the USA market, plus this now provides another option to offer
IP based communications versus the already existing 3G solutions.
As a result I chose to think how the very much-ballyhooed WiMax play
could be differentiated versus being looked at as only a substitute for
the mobile phone. As I like to say “too much me too, me also, not me
different” is nothing really new. I mean, what good is going the 4G
route if all it does is give a less expensive experience to make phone
calls on the go, and not work everywhere for many years to come. That’s
what the cable guys already did with VoIP, where the only difference
from what we’ve always had from the phone company is the wire the phone
service travels over and the bill.
WiMax as a substitute for the mobile phone is a boneheaded idea for the reasons Andy states.He’s pretty open with his “too much me to, me also, not me different” description of ideas he sees as off the mark. I tend to be less charitable and call a boneheaded idea just that. A carrier-based approach to WiMax will take years to deploy. I compare carrier WiMax with ISDN in the United States. Never has a technology cost so much, to do so little, and arrive on the scene so late. By the time ISDN for consumers was generally available, it was overpriced, under-featured and obsolete. So now the telcos are going to make WiMax the next ISDN.
Sprint is among one of the least innovative companies I’ve watched for the past ten years. They’re slow to market with solutions that under-deliver, if they work at all. So know they’re going to partner with Clearwire. I’m just not as impressed as a number of my colleagues.
The success of WiFi has not been driven, extended or enlarged by the pitiful efforts we’ve seen that put WiFi in Starbucks and McDonalds. WiFi succeeded because it was unlicensed spectrum that you and I could deploy quickly, easily and cheaply in our homes, offices and businesses. Just like the disruptive technologies Christensen so aptly described, WiFi came in at the low end of a different market. It created its own market. I don’t believe WiMax has that same kind of potential. It’s too direct a competition potentially to existing wireless technologies. I believe we’ll see WiMax widely deployed, but it’s not a wireless technology I believe will sustain momentum long enough to become a major incumbent technology…at leastw not with the carriers driving it. They’ll drive it to mediocrity in their effort to stave off their own painful death while they tell themselves they’re innovating.
The next generation of wireless isn’t here yet. I don’t think we’ve really seen it yet. While the US runs a 2.5G network at best, much of the world is moving toward real 3G wireless. 4G is another animal and what we’re seeing today is a lot of experimentation in the space as players try to find the technology mesh that will gain the critical mass of user acceptance.
I don’t think this mesh will come from any company we see today as a telco. The telcos are innovating us into the dark ages of FCC largess protecting their business. The telcos exist in an environment of cronyism, back room handshakes and political contributions. That’s an approach that may stave off death a while longer, but it won’t create an environment where innovation thrives. They’ve still got their heads in the sand. While they’ve been beat over the head with a clue-by-four repeatedly for years, the telcos, to a very large degree, still haven’t a clue. They don’t have a ten year roadmap that’s got any grit to it.
Technorati Tags: telcos, WiMax, Skype, 4G, next generation networks, unified communications
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